Regular Industry Development Updates, Opinions and Talking Points relating to Manufacturing, the Supply Chain and Logistics.

KFC delivery woes show the value of supply chains in modern business

20-Feb-2018

by Dr Virginia Spiegler

Senior Lecturer in Operations and SCM, University of Kent

In response to the issues affecting the delivery of chicken to KFC restaurants across the UK, please find a comment from Dr Virginia Spiegler, a Senior Lecturer in Operations and Supply Chain Management at the Kent Business School at the University of Kent.

‘The KFC case highlights the importance of transportation and logistics operations, which are frequently and unfairly regarded by many companies as non-value adding.

‘In the past few years, many companies have taken steps to streamline supply chain processes by reducing holding inventory, outsourcing non-core activities and cutting the number of supplier on the assumption that the market is relatively stable and predictable.

‘KFC’s decision to switch their 3PL (third party logistics) provider from Bidvest to DHL was a measure to reduce logistics service cost. However, having hundreds of restaurants closed could cost them millions in lost sales and low capacity utilisation. This problem could have been anticipated by comparing Bidvest and DHL capabilities.

‘While Bidvest is specialised in food service distribution and operates a network of distribution centres across the UK, DHL is trying to run the same operation from a single distribution centre. Moreover, it is the first time that DHL is partnering with QSL, who has been providing IT solutions on demand planning and stock management to KFC since 2011. Therefore the alignment between QSL services and DHL physical distribution is also crucial and building such alignment can take time.’